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I once rode in a taxi where the cabbie regaled me with his retirement plan; each time he'd saved up enough money, he'd go on a trip to Atlantic City and try to

by ISL 13y ago

I once rode in a taxi where the cabbie regaled me with his retirement plan; each time he'd saved up enough money, he'd go on a trip to Atlantic City and try to win. He was fairly certain that this was a good idea. Please don't play with more than you can afford to lose. It's bad for bitcoin, and a crash might be bad for you. If you can't afford to retire, society may compel others to help you. Please be responsible. I'm not a tax lawyer: The tax-free nature of Roth IRAs might render some of the questions of bitcoin taxation less of a concern?

lukifer 13y ago
The funny thing about the cabbie story is that it only takes one statistical outlier success story for the meme to spread to a thousand others who fritter away their savings in this manner. I've also started to wonder recently about the relationship between the gambling instinct and entrepreneurship. While there is obviously a distinction (entrepreneurs are often pursuing genuine passions and/or creating real value), when you look at the real-world risks and returns, it certainly seems to have a similarly irrational component, both for founders and investors. (Not that I'm judging; the line between genius and madness is a thin one.)
- gnaritas 13y ago
  That's because most people reason by anecdote rather than actual statistics, sad but in my experience true.
- NhanH 13y ago
  There is the fact that to a certain extent, entrepreneurs know their odds going in. Gamblers more likely than not doesn't.
  - bdcravens 13y ago
    Many gamblers know the numbers fairly well. The problem is they let their heart convince them that the Gambler's Fallacy doesn't exist for them.
  - judk 13y ago
    That's exactly backwards. Most games of chance post odds explicitly. Entrepeneurship works because 1 it actually creates value, not negative expected value, 2 much of the gambling is with other people's money (investors and creditors) who don't get their teeth in if the entrepreneur fails, raising EV further.
    - NhanH 13y ago
      Sorry I wasn't being too clear. Knowing the odds as in "I know I have little chance to have an exit, but I still want to do it anyway". While gamblers might see the odds posted but still think "I'm gonna be the one guy who wins".
fragsworth 13y ago
> Please don't play with more than you can afford to lose. When considering investing in something like bitcoin, draw out a table of what you expect the outcome to be 10 years from now. Rows can be bitcoin price ranges (each row having what you believe is a roughly equal chance of happening), and columns can be how much you invested in it. Rate your expected happiness (use some scale -100 to 100?) from each result in each square. Keep in mind that if bitcoins reach a high number like $100,000 and you didn't invest, you will feel like you lost that money. (I feel this way now, from not investing previously - and it kills me. Happiness -25 maybe.) The only logical thing to do, at this point, is pick the column that results in the highest happiness. It turns out that for those of us who believe there's a reasonable likelihood (25% or greater) that bitcoins will be very high ($1 million or higher) over its lifetime, the logical thing to do is actually to put the vast majority of our savings into bitcoin. Nearly all of it, in fact.
- yen223 13y ago
  Back in 2007, you'd be a fool if you didn't pour your life savings into real estate, since prices could only go up, right?
  - interstitial 13y ago
    Does anyone have HN archive? Back then most nerds thought the latest and greatest forever-bubble was New Century Financial.
    - theunixbeard 13y ago
      Try hnsearch.com (made by the YC company Octopart to show off their ThriftDB datastore).
- pfisch 13y ago
  Holy hell, this is some crazy advice. If you have a sizable savings that you have been building for 5 or more years then the vast majority of your savings shouldn't be invested in any single asset.

by ISL 13y ago

lukifer 13y ago

The funny thing about the cabbie story is that it only takes one statistical outlier success story for the meme to spread to a thousand others who fritter away their savings in this manner. I've also started to wonder recently about the relationship between the gambling instinct and entrepreneurship. While there is obviously a distinction (entrepreneurs are often pursuing genuine passions and/or creating real value), when you look at the real-world risks and returns, it certainly seems to have a similarly irrational component, both for founders and investors. (Not that I'm judging; the line between genius and madness is a thin one.)

gnaritas 13y ago
That's because most people reason by anecdote rather than actual statistics, sad but in my experience true.
NhanH 13y ago
There is the fact that to a certain extent, entrepreneurs know their odds going in. Gamblers more likely than not doesn't.
- bdcravens 13y ago
  Many gamblers know the numbers fairly well. The problem is they let their heart convince them that the Gambler's Fallacy doesn't exist for them.
- judk 13y ago
  That's exactly backwards. Most games of chance post odds explicitly. Entrepeneurship works because 1 it actually creates value, not negative expected value, 2 much of the gambling is with other people's money (investors and creditors) who don't get their teeth in if the entrepreneur fails, raising EV further.
  - NhanH 13y ago
    Sorry I wasn't being too clear. Knowing the odds as in "I know I have little chance to have an exit, but I still want to do it anyway". While gamblers might see the odds posted but still think "I'm gonna be the one guy who wins".

fragsworth 13y ago

> Please don't play with more than you can afford to lose. When considering investing in something like bitcoin, draw out a table of what you expect the outcome to be 10 years from now. Rows can be bitcoin price ranges (each row having what you believe is a roughly equal chance of happening), and columns can be how much you invested in it. Rate your expected happiness (use some scale -100 to 100?) from each result in each square. Keep in mind that if bitcoins reach a high number like $100,000 and you didn't invest, you will feel like you lost that money. (I feel this way now, from not investing previously - and it kills me. Happiness -25 maybe.) The only logical thing to do, at this point, is pick the column that results in the highest happiness. It turns out that for those of us who believe there's a reasonable likelihood (25% or greater) that bitcoins will be very high ($1 million or higher) over its lifetime, the logical thing to do is actually to put the vast majority of our savings into bitcoin. Nearly all of it, in fact.

yen223 13y ago
Back in 2007, you'd be a fool if you didn't pour your life savings into real estate, since prices could only go up, right?
- interstitial 13y ago
  Does anyone have HN archive? Back then most nerds thought the latest and greatest forever-bubble was New Century Financial.
  - theunixbeard 13y ago
    Try hnsearch.com (made by the YC company Octopart to show off their ThriftDB datastore).
pfisch 13y ago
Holy hell, this is some crazy advice. If you have a sizable savings that you have been building for 5 or more years then the vast majority of your savings shouldn't be invested in any single asset.